Itcpartnerships

A partnership occupies a unique — and frequently misunderstood — position in Zimbabwe's income tax system. Unlike a company or a trust, a partnership is not a taxable person. The definition of "person" in Section 2(1) of the Income Tax Act [Chapter 23:06] includes "a company, body of persons corporate or un-incorporate (not being a partnership), local or like authority, deceased or insolvent estate" — the parenthetical exclusion is deliberate and is the foundation of everything in this lesson. Because a partnership is not a "person", it cannot be a "taxpayer", it is never assessed in its own name, and it never pays income tax. Zimbabwe instead applies the conduit (transparency) principle: the partnership's income flows through to the individual partners and is taxed in their hands.

The machinery that gives effect to transparency is short but precise. Section 10(2) of the Income Tax Act deems income received by or accrued to or in favour of a partnership in any period ending on an accounting date to be income received by or accrued to the partners on that accounting date, in the proportions in which the partners agree to share the profits as at that date. Section 37(15) requires the partners to render a joint return of the partnership's income, supported by partnership accounts, with each partner separately and individually liable for the rendering of that return — but expressly provides that "the partners shall be liable to tax only in their separate individual capacities". Section 51(5) completes the design: separate assessments shall be made upon partners notwithstanding the joint return. One computation, one return, many assessments.

Two consequences of transparency dominate practice. First, a partner is not an employee of the partnership: paragraph 1 of the Thirteenth Schedule expressly excludes from "remuneration" "any amount paid or payable out of moneys of a partnership to a person who is a member of that partnership". So-called partner "salaries", interest on capital and drawings are therefore appropriations of profit, not deductible expenses, and attract no PAYE. Secondly, a partner's share of partnership profit is taxable income from trade or investment, which the Finance Act [Chapter 23:04] taxes — per the rate schedule to Chapter I, Section 14(2)(b) — at a flat 25% for the year of assessment 2025, plus the 3% AIDS levy (an effective 25.75%), and not at the progressive 0%–40% scale, which the Finance Act reserves for "taxable income from employment". Each partner settles that liability personally through quarterly payment dates (QPDs) under Section 72 and the self-assessment regime under Section 37A where specified.

Transparency does not mean invisibility. The Act repeatedly reaches the partnership as a unit where collection or anti-avoidance demands it: Section 77(5) lets the Commissioner recover a defaulting partner's tax referable to partnership income from the partnership itself, capped at the value of that partner's interest in partnership assets; Section 2A makes partners and their partnerships "associates" of one another (with 50% control thresholds), wiring partnerships into the transfer-pricing and anti-avoidance code of Sections 98, 98A and 98B; and the withholding-tax Schedules (Ninth, Seventeenth, Nineteenth, Twenty-First) deem a partnership ordinarily resident in Zimbabwe if at least one member is ordinarily resident, so cross-border fee, royalty, dividend and interest flows involving partnerships are squarely caught.

The lesson also covers the special texture of partnership life: the death-of-a-partner proviso to Section 37(15) (which defers the surviving partners' shares of the broken-period profit to the year of assessment in which the first anniversary of the pre-death accounting date falls); the deductibility of annuities paid to former partners under Section 15(2)(q)(ii) (subject to a per-partner monetary cap); pension contributions by partners, for which the Sixth Schedule deems the partnership to be the partner's "employer" and the partner's taxable income from the partnership to be his or her "annual emoluments"; and the convention and trade-mission deduction under Section 15(2)(w), which is allowed per partner (one convention or mission each, capped at US$3,600) and shared in profit-sharing ratio. For professional firms, the Finance Act 2024 abolished the optional Self-Employed Professionals' Presumptive Tax with effect from 1 January 2025: architects, engineers, legal practitioners, health practitioners and estate agents — including those practising "as a member of a partnership" (Twenty-Sixth Schedule) — must now comply with Section 37A self-assessment.

Finally, keep the tax heads apart. The income-tax transparency of a partnership is not mirrored in VAT: under the VAT Act [Chapter 23:12] a partnership is a registrable "person" and can be a registered operator in its own name (see the VAT lessons, especially Representative Persons and Withholding Agents). And for capital gains tax, disposals of specified assets held in common by partners are dealt with at partner level in proportion to their interests. As established in the lesson on Persons Liable to Income Tax (Persons Liable to Income Tax in Zimbabwe), the partnership's exclusion from "person" is the single most examinable feature of this topic — this lesson now builds the complete statutory, computational and practical picture on that foundation.

Begin from first principles. People who want to carry on business together have a menu of legal vehicles in Zimbabwe: they may incorporate a company under the Companies and Other Business Entities Act [Chapter 24:31], settle assets on a trust, register a private business corporation, or simply agree — by written deed or by conduct — to carry on business in common with a view to profit. That last arrangement is a partnership.

A partnership is, at common law, a contractual relationship: an agreement between two or more persons to contribute money, property, labour or skill to a common undertaking, to carry it on jointly for their mutual benefit, and to share the profits (and usually the losses). Zimbabwe has no Partnership Act; the law of partnership is Roman-Dutch common law as developed by the courts. Three features of that common-law character matter enormously for tax:

1. No separate legal personality. A company is a legal person distinct from its shareholders; a partnership, in general, is not distinct from its partners. The "firm" is a collective label for the partners. The partnership's property is owned by the partners in common; the partnership's debts are the partners' debts (jointly, and on dissolution or insolvency the partners' personal estates answer for them).
2. Mutual agency. Each partner is an agent of the others for the business of the firm: a contract concluded by one partner within the scope of the partnership business binds them all.
3. Delectus personae. A partnership is a relationship of chosen persons. The admission of a new partner, the retirement of an old one, or the death of any partner in principle dissolves the existing partnership and (if the business continues) creates a new one. This is why the Act needs special timing rules when the composition of a firm changes.

Because the general law treats the partnership as transparent, the tax law follows suit. The Income Tax Act could have chosen to tax partnerships as if they were companies — some jurisdictions do — but Zimbabwe's legislature deliberately excluded partnerships from the definition of "person" in Section 2(1), with the result that the charging section, Section 6, which charges income tax "in respect of the taxable income ... of any person", simply cannot apply to a partnership. The charge fastens instead on the partners, each of whom is a person (usually an individual, though companies can be partners too).

Why does this matter in practice, and why is it examinable?

• Professional firms are partnerships. Law firms, accounting and audit firms, architectural and engineering practices, medical practices and estate agencies in Zimbabwe are very commonly structured as partnerships. Their taxation is a daily, high-value compliance question.
• The computation is genuinely different. Partner "salaries" are not salaries; partnership "expenses" that are really appropriations must be added back; the profit is allocated, not distributed; and the rate that applies to the allocated share is the flat trade-and-investment rate, not the PAYE scale. Practitioners who treat a partnership like a small company (or like an employer of its partners) make systematic errors.
• ZIMRA audit interest is real. The joint return under Section 37(15) presents the whole firm's result to the Commissioner; mismatches between the joint return and the partners' individual returns, PAYE wrongly operated (or wrongly not operated) on amounts paid to partners, and family partnerships used to split income (Section 98A territory) are recurring audit flags.
• The boundary questions are conceptually rich. Is a profit-sharing arrangement a partnership or an employment relationship with a bonus? Is a "salaried partner" a partner or an employee? Does a joint venture between companies constitute a partnership for tax purposes? Each boundary changes the tax result.

As established in Persons Liable to Income Tax in Zimbabwe, the taxable-person map of the Act runs: individuals, companies, trusts, deceased and insolvent estates — with the partnership as the deliberate gap in the map. This lesson fills in how the gap is administered. The computational machinery of gross income (Gross Income Definition and Case Law), exemptions (Exempt Income under Zimbabwean Tax Law), deductions (Allowable Deductions and General Formula, Specific Allowable Deductions (section 15(2))), prohibited deductions (Prohibited Deductions under section 16) and capital allowances (Capital Allowances — Fourth Schedule) all apply inside the partnership computation exactly as for any other trader; what is new here is who is taxed, when, at what rate, and through what compliance machinery.

The partnership rules are scattered across the Income Tax Act and the Finance Act rather than collected in one Part. The complete statutory inventory is as follows.

B.1 Section 2(1) — the exclusion from "person"

Section 2(1) of the Income Tax Act [Chapter 23:06] defines:

"person" includes a company, body of persons corporate or un-incorporate (not being a partnership), local or like authority, deceased or insolvent estate and, in relation to income the subject of a trust to which no beneficiary is entitled, the trust.

The words "not being a partnership" carve the partnership out of the only definition through which the charging section operates. A partnership is therefore not a person, not a "taxpayer" (defined as "any person chargeable with tax"), and not assessable. Note carefully what the exclusion does not do: it does not exempt partnership income (the income is fully taxed — in the partners' hands), and it does not prevent other provisions of the Act from referring to partnerships expressly where the legislature wants to reach them (many do, as set out below). The annotation to the definition in the source Act (citing Mota Engenharia Construction SA v ZIMRA 22-SC-115) confirms that "person" includes a non-resident entity — relevant where a foreign company is a partner.

By contrast, the definition of "agent" in Section 2(1) includes "any partnership ... when acting as an agent", which shows the drafting pattern: where the Act intends to include partnerships, it says so expressly.

B.2 Section 10(2) — the allocation and timing rule

Section 10 is headed "Special circumstances in which income is deemed to have accrued". Subsection (2) provides:

Income received by or accrued to or in favour of a partnership in any period ending on an accounting date shall be deemed to be income received by or accrued to or in favour of the partners on such accounting date in the proportions in which the partners agree to share the profits of the partnership as at such date.

This single sentence does three distinct jobs:

1. Attribution — partnership income is the partners' income. The deeming converts what the firm earned into gross income "received by or accrued to" each partner for the purposes of Section 8(1).
2. Proportion — the split follows the profit-sharing agreement, and specifically the agreement as at the accounting date. If the partners vary their ratio during the year, the ratio prevailing at the accounting date governs the whole period ending on that date.
3. Timing — every partner's share is deemed to accrue on the accounting date, not day by day as the firm earns it. For a partnership that makes up accounts to 31 December (the default year of assessment), the entire year's share lands on 31 December and falls into that year of assessment.

As established in Tax Residence and Source of Income, Section 10 is a timing-and-attribution provision, not a source rule: the source of each partner's share is determined by the ordinary source principles applied to the partnership's activities (where the firm's services were rendered, where its trade was carried on), and the partner's share retains that source character.

B.3 Section 37(15) — the joint return

Section 37(15) of the Income Tax Act provides:

Persons carrying on any trade in partnership shall, subject to subsection (13), in respect of each year of assessment, make a joint return of income as partners in such trade together with such particulars as may from time to time be prescribed, and such return shall, notwithstanding any provisions to the contrary contained in any agreement of partnership, be accompanied by such accounts as are necessary to show the result of the operations of the partnership for each such year of assessment, and each partner shall be separately and individually liable for the rendering of the joint return, but the partners shall be liable to tax only in their separate individual capacities.

Unpack the elements:

• One joint return per firm per year of assessment, with prescribed particulars and the partnership accounts attached. The accounts obligation overrides any confidentiality clause in the partnership deed ("notwithstanding any provisions to the contrary contained in any agreement of partnership").
• Every partner is separately and individually liable for rendering it. If the return is not filed, ZIMRA may proceed against any partner for the default — there is no hiding behind a managing partner.
• Liability to tax remains individual. The joint return is an information and computation vehicle; it is not an assessment of the firm.
• The reference to subsection (13) preserves the Commissioner's discretion to accept accounts drawn to a date other than 31 December as the firm's accounting date.

The proviso to Section 37(15) deals with the death of a partner — the one event the legislature singled out for special timing treatment:

Provided that, where because of the death of a partner accounts are prepared in order to show the results of the operations of the partnership for the period from the last accounting date to the date of the death of the partner, the surviving partners shall not be required to include their shares of the income as shown by such accounts in any return other than that for the year of assessment in which the first anniversary of the accounting date prior to the date of the death of the partner falls, and their shares of income shall be deemed to accrue accordingly.

In other words: when a partner dies mid-period and broken-period accounts are drawn to the date of death, the survivors' shares of that broken-period profit are not accelerated into the year of death merely because accounts were drawn; they are returned in the year of assessment in which the first anniversary of the last pre-death accounting date falls — i.e. the year in which the period would ordinarily have closed. The deceased partner's own share to the date of death is, of course, income of the deceased to date of death and thereafter the estate is dealt with under the deceased-estate rules (see Taxation of Trusts and Deceased Estates).

B.4 Section 51(5) — separate assessments

Section 51(5):

Separate assessments shall be made upon partners notwithstanding subsection (15) of section thirty-seven.

This is the assessment-stage mirror of Section 37(15): although the partners file jointly, the Commissioner assesses each partner individually on his, her or its own taxable income (which includes the Section 10(2) share plus everything else the partner earns). Each partner separately enjoys the objection-and-appeal rights attaching to his or her own assessment (Sections 62 et seq. — see Objections and Appeals under Income Tax when generated), and each partner's own deductions, credits and loss positions apply.

B.5 Section 77(5) — recovery of a partner's tax from the partnership

Transparency creates a collection risk: the taxpayer is the partner, but the income-producing assets sit in the firm. Section 77 ("Recovery of tax") subsection (5) closes the gap:

(a) If any tax due and payable by a partner in any business, which is referrable to the taxable income derived from the partnership business, is outstanding after his assets in Zimbabwe, other than his interest in the assets of the partnership, have been excused or taken in execution, the partnership shall be deemed to be chargeable with the tax outstanding ... and that partner shall be released from the payment of so much of the tax outstanding as is recovered by the Commissioner in pursuance of that notification: Provided that the amount of tax recoverable from the partnership shall not exceed the value of such partner's interest in the assets of the partnership. (b) The amount of tax referable in terms of paragraph (a) shall be the proportion of the total tax due by the partner determined in accordance with the ratio that the partner's taxable income derived from the partnership business bears to his total taxable income.

Note the strict sequencing and limits: (i) recovery from the firm is a last resort, available only after the partner's other Zimbabwean assets have been pursued; (ii) only the partnership-referable slice of the partner's tax (computed by the statutory ratio) can be collected from the firm; and (iii) recovery is capped at the value of the partner's interest in partnership assets — the other partners' shares are protected. The partner is released pro tanto.

B.6 Thirteenth Schedule — partners are outside PAYE

Paragraph 1 of the Thirteenth Schedule (employees' tax) defines "remuneration" widely, but the definition expressly does not include:

(e) any amount paid or payable out of moneys of a partnership to a person who is a member of that partnership;

Whatever label the firm uses — "partner's salary", "monthly draw", "interest on capital account", "management allowance" — a payment out of partnership moneys to a partner is not remuneration, so no PAYE is deductible and the partner is not an "employee" of the firm for Thirteenth Schedule purposes. The corollary, developed in section C below, is that such amounts are appropriations of the partner's profit share, taxed as part of the Section 10(2) allocation. (Genuine employees of the partnership — clerks, assistants, associates who are not partners — are taxed under PAYE in the ordinary way, and the partnership as their employer must register and withhold per the Thirteenth Schedule: see Taxation of Employment Income and PAYE.)

Within the fringe-benefit valuation rules of Section 8(1)(f), the definition of "person associated", in relation to an employer that is not a company, includes "any partnership of which such employer is a member" — so benefits provided to an employee by a partnership connected to the employer are still caught as employment benefits. This is an inclusion aimed at employees, not partners.

B.7 Finance Act — the rate: flat 25% on trade and investment income

The Finance Act [Chapter 23:04] Section 14(1) defines:

"taxable income from employment" means any part of the taxable income of a person, other than a company, a trust or a pension fund, which consists of remuneration as defined in the Thirteenth Schedule to the Taxes Act; "taxable income from trade or investment" means any part of the taxable income of a person, other than a company or a trust, which is received by or accrues to him from any trade, investment or other activity, but does not include taxable income from employment.

Because a partner's share is not remuneration (Thirteenth Schedule paragraph 1(e) above), it is necessarily taxable income from trade or investment. Section 14(2) then charges:

• Section 14(2)(a): taxable income from employment of an individual — at the progressive scale (for the year of assessment 2025: 0% up to the tax-free threshold, rising through 20%, 25%, 30% and 35% to 40% on the top band; in USD terms per the 2025 ZIMRA tables, 0% up to US$1,200 per annum and 40% above US$36,000 per annum; in ZiG, 0% up to ZiG33,600 and 40% above ZiG1,008,000);
• Section 14(2)(b): taxable income of individuals from trade or investment — at a flat 25% (per the rates schedule to Chapter I of the Finance Act as substituted by the Finance (No. 2) Act 7/2024 for the year of assessment 2025);
• Section 14(2)(c): taxable income of a company or trust — 25% (see Corporate Income Tax in Zimbabwe).

To each must be added the AIDS levy of 3% of the tax (stated on the 2025 ZIMRA tax tables: "Aids Levy is 3% of the Individuals' Tax payable"), giving an effective 25.75% on a partner's share. The flat trade-and-investment rate for individuals was aligned with the corporate rate when the legislature restructured Section 14 — the practical effect is that a partner pays the same headline rate on his share as a company pays on its profits, and the progressive scale (with its 0% threshold and its 40% peak) is reserved for employment income.

B.8 Deduction provisions that name partners

Three deduction rules in Section 15(2) speak directly to partnerships:

• Section 15(2)(q)(ii) and (iii) — annuities to former partners. A taxpayer may deduct amounts paid by way of annuity, allowance or pension to "a former partner who has retired from the former partnership on the grounds of ill-health, infirmity or old age", or to a person who is or was dependent on a former employee or former partner. The deduction is subject to a monetary cap per former partner per year, reduced by any pension or annuity the former partner receives from a fund to which the former partnership contributed. "Former partner" is defined to include a member of the taxpayer's partnership, of a partnership with the taxpayer's co-partners, or of a predecessor partnership. The cap has been amended and re-denominated repeatedly (US$ in 2009, ZWL in 2019, increased in 2020, 2021 and 2022); the consolidated text prints overlapping layers — for the former-partner limb the printed figures include "zw$100,000 or US$200" per former partner.
• Section 15(2)(w) — conventions and trade missions. The deduction for attending one convention or one approved trade mission in connection with the trade is, by proviso (ii), adapted for firms: where the attending person is a member of a partnership and the partnership incurred the expenditure, the deduction is allowed in respect of one convention or trade mission for each partner, limited per partner to the lesser of the expenditure incurred or US$3,600 (figure as increased by Finance Act 13/2023), and is allowed to the partners in the same proportion as they share profits or losses in the year the expenditure is incurred (with a spill-over rule deeming a convention straddling two years to end — and the expenditure to be incurred — in the year it ends).
• Section 15(2)(h) and the Sixth Schedule — pension contributions by partners. Current law admits partners into the retirement-funding deduction system by deeming devices in the Sixth Schedule: in relation to a member of a benefit or pension fund who is a member of a partnership, "employer" means the partnership, and the member's "annual emoluments" means "the taxable income of the member from the partnership". A partner's qualifying contributions are therefore measured against his partnership taxable income, within the ordinary Sixth Schedule monetary maxima (see Taxation of Employment Income and PAYE for the current cap). Historically this was not so: the proviso to Section 15(2)(h) records that no deduction was allowed for contributions paid by a member of a partnership in respect of any period prior to 1 April 1995 — Parliament opened retirement funding to partners only from that date, a classic old-law/new-law contrast.

B.9 Anti-avoidance wiring: Section 2A associates and the TP code

Section 2A(2) treats as a person's associate: "(b) a partner of the person, unless the Commissioner is satisfied that neither person acts in accordance with the directions, requests, suggestions or wishes of the other; (c) a partnership in which the person is a partner, if the person, either alone or together with 1 or more associates, controls 50% or more of the rights to the partnership's income or capital;" and, mirroring it, "(f) where the person is a partnership, a partner in the partnership who, either alone or together with 1 or more associates, controls 50% or more of the rights to the partnership's income or capital". Section 2B extends "control" of companies to control "through one or more interposed companies, partnerships or trusts".

The consequences run through the whole anti-avoidance code studied in Transfer Pricing and Anti-Avoidance: transactions between a partner and the firm, or between the firm and entities its partners control, are controlled transactions for Section 98B and the Thirty-Fifth Schedule (arm's-length principle, documentation, penalty ladder); Section 98A (income splitting) targets the transfer of income or income-producing property to an associate — the family partnership that exists mainly to divide one earner's income among relatives is its paradigm case; and the general anti-avoidance rule in Section 98 can reconstruct abnormal partnership arrangements entered into solely or mainly to obtain a tax benefit.

B.10 Withholding-tax Schedules: the partnership's deemed residence

For the withholding taxes the legislature could not ignore partnerships, because firms both pay and receive the relevant flows. The pattern (full detail in Withholding Taxes — Residents and Non-Residents):

• Seventeenth Schedule (non-residents' tax on fees, 15%): "payer" includes a partnership; a "non-resident person" includes "a partnership ... which is not ordinarily resident in Zimbabwe"; and paragraph 1(2)(d) deems a partnership ordinarily resident in Zimbabwe if at least one member is ordinarily resident — both for fees the firm earns and fees it pays.
• Nineteenth Schedule (non-residents' tax on royalties, 15%): the same deemed-residence rule for partnerships paying or receiving royalties.
• Ninth Schedule (non-resident shareholders' tax on dividends): a company must withhold NRST when it distributes a dividend to "a partnership which is not ordinarily resident in Zimbabwe" — so shares held by a foreign firm attract NRST at the Finance Act rates (10% listed / 5% VFEX / 15% other).
• Twenty-First Schedule (residents' tax on interest): the "payee" definitions embrace "a partnership ... which is ordinarily resident in Zimbabwe", so financial institutions withhold RTI (5% on ≥90-day fixed deposits, 15% otherwise) on partnership deposits; the credit flows to the partners with their shares.
• Section 80 (30% withholding absent an ITF 263 tax clearance) applies to amounts payable under contracts with the State or traders; a trading partnership needs its compliance status in order — in practice each partner's and the firm's registration details must support the clearance (see Provisional Tax, QPDs and PAYE Administration).

B.11 Professional partnerships, presumptive tax and self-assessment

The Twenty-Sixth Schedule (presumptive taxes) defines a "self-employed professional" as "an individual who, on his or her own account or as a member of a partnership, earns income as" a registered architect, engineer or technician, legal practitioner, health practitioner or real estate agent — unless the individual holds a tax clearance certificate evidencing that he or she furnished a Section 37 return for the last due year. The Finance Act Section 22C(3) (as substituted by the Finance Act, 2024, gazetted 28 October 2024) now directs that these self-employed professionals "shall comply with Section 37A ('Self-assessment return')", with a transitional proviso preserving the old presumptive rate only until 1 January 2025 for those who had previously opted in. The practical message for the partner in a professional firm in the year of assessment 2025: the presumptive shortcut is gone; the partner files a self-assessment return of his or her actual share.

On the administrative side, the ZIMRA guide to the ITF 12C confirms that, in practice, the Commissioner-General has specified as self-assessment taxpayers (required to file the ITF 12C) companies and trusts earning trade or investment income, and "individuals, partnerships, pension funds and other juristic persons earning income from trade and investment, where they have been notified". The joint-return obligation of Section 37(15) and each partner's individual return thus operate within the TaRMS/Self-Service Portal self-assessment environment described in Provisional Tax, QPDs and PAYE Administration and Returns and Record-Keeping Compliance.

B.12 Miscellaneous express references

For completeness, partnerships also surface in: the Fourth Schedule definition of "staff housing", which excludes a block of flats owned by a "company, partnership or association of persons" where the partners or members have occupation rights attached to their interests (an anti-abuse carve-out — partners cannot generate staff-housing allowances on their own residences); the Finance Act Section 23 definition of "public entity", which includes "any partnership or joint venture between the State and any person" prescribed by the Minister; the mining-title provisions of Section 98D, which define "mining entity" to include partnerships, syndicates and joint ventures whether or not their members are Zimbabwean; and Section 37AA (separate returns for foreign and local currency income), which the Finance Act's currency rules apply to "an individual or partnership whose taxable income from trade or investment was received or accrued in whole or in part in Zimbabwean currency" (see the dual-currency discussion in Taxation of Individuals in Zimbabwe).

C.1 What is (and is not) a partnership

Since the Act nowhere defines "partnership", the common-law essentials govern. Under Roman-Dutch law a partnership exists where the following elements concur:

1. Each party contributes something to the common enterprise — money, property, the use of property, labour or skill;
2. The business is carried on for the joint benefit of the parties;
3. The object is to make a profit; and
4. The parties intend to contract a partnership — the agreement, on its true construction, is one of partnership and not something else (employment, loan, lease, joint ownership).

No written deed is required: a partnership can arise orally or by conduct, and conversely a document headed "Partnership Agreement" will not create one if the essentials are absent. Substance prevails over label. The intention requirement does the boundary work in the hard cases:

• "Salaried partner" vs employee. A professional given the title "partner" but who contributes no capital, bears no share of losses, and receives a fixed monthly amount regardless of profit is, in substance, an employee: his receipts are remuneration, PAYE applies, and the Thirteenth Schedule paragraph 1(e) carve-out does not protect the firm from withholding obligations. Conversely, a true partner remunerated by a "salary plus share" is outside PAYE entirely.
• Profit-sharing employee vs partner. Sharing gross returns or receiving a profit-linked bonus does not by itself make a person a partner; sharing net profits with mutual agency and joint risk points to partnership.
• Co-ownership vs partnership. Two persons who jointly own a building and split the rent are co-owners deriving investment income; without a common business carried on for profit there is no partnership, though the tax outcome (each taxed on his share) often looks similar.
• Joint venture. A once-off collaboration between companies may amount to a partnership for the duration of the venture if the essentials are met; each corporate venturer is then taxed on its Section 10(2) share as a person in its own right (at the Section 14(2)(c) company rate).
• Husband-and-wife partnerships are lawful and common (and since spouses are assessed separately — see Taxation of Individuals in Zimbabwe — genuinely splitting a jointly-run business's profits between them is unobjectionable); but a "partnership" in which one spouse contributes nothing and performs no function invites reconstruction under Section 98A (income splitting between associates).

C.2 The transparency principle in operation: a five-step framework

Every partnership tax computation follows the same sequence. Internalise it as a framework:

Step 1 — Compute the partnership's taxable result as if the firm were a single taxpayer. Apply the entire ordinary machinery to the firm's figures: gross income under Section 8(1) (source-based, capital excluded), minus Third Schedule exemptions, minus Section 15(2) deductions (general formula and specific deductions), subject to Section 16 prohibitions, plus/minus trading-stock and capital-allowance adjustments under the Second and Fourth Schedules. The firm's accounting profit is the starting point, adjusted for tax in the usual way.

Step 2 — Add back appropriations of profit. Anything the firm "paid" a partner in his capacity as partner is not expenditure incurred in the production of income; it is a division of the profit itself. Add back: partners' salaries and bonuses; interest credited on partners' capital or current accounts; rent paid to a partner for premises he owns where the arrangement is in substance profit-extraction (a genuine arm's-length lease of a partner's separately-owned building to the firm is deductible to the firm and rental gross income of the partner — the distinction is explored in C.4); private expenses of partners borne by the firm; and drawings (which should never have been expensed at all).

Step 3 — Allocate the adjusted taxable income (the "divisible profit") among the partners. First restore to each partner the specific appropriations made in his favour (salary, interest on capital), then split the balance in the profit-sharing ratio prevailing at the accounting date (Section 10(2)). The result is each partner's share of partnership taxable income.

Step 4 — Tax each partner as a person. Each partner aggregates the partnership share with everything else he, she or it earns. For an individual partner, the share is taxable income from trade or investment taxed at the flat 25% plus 3% AIDS levy; any separate employment income remains on the progressive scale; the partner's own credits (elderly, blind, disabled, medical — Finance Act Sections 10–13) apply against his total tax. For a corporate partner, the share simply joins the company's taxable income at 25%. Each partner separately claims his Sixth Schedule pension deduction measured on his partnership taxable income.

Step 5 — Comply. The firm renders the joint return with accounts (Section 37(15)); each partner is separately assessed (Section 51(5)) or self-assesses (Section 37A / ITF 12C where specified); each partner pays provisional tax on the QPD dates (Section 72: 10% by 25 March, 25% by 25 June, 30% by 25 September, 35% by 20 December of the current year — see Corporate Income Tax in Zimbabwe for the machinery); and the firm operates PAYE only for its true employees.

C.3 The accounting-date rule: timing and ratio consequences

Section 10(2)'s choice of the accounting date as the moment of accrual has consequences that examiners love:

• No accrual before the accounting date. A partner who retires before the accounting date has, strictly, no Section 10(2) accrual on that date under the continuing agreement — his entitlement to the broken-period profit accrues under the dissolution/retirement accounts drawn to his exit date. In practice ZIMRA accepts accounts drawn to the change date, taxing the outgoing partner on his share to exit.
• Mid-year ratio changes. Because the statute fixes the split by the agreement "as at such date", a ratio amended during the year governs the whole period ending on the accounting date. Partners who rearrange ratios late in the year shift the incidence of tax on the entire year's profit — legitimate if commercially genuine, but an obvious Section 98/98A reconstruction target if the late change is tax-driven (e.g. diverting profit to a partner with assessed losses).
• Death of a partner. The proviso to Section 37(15) (B.3 above) defers the survivors' broken-period shares to the year in which the first anniversary of the last pre-death accounting date falls, preventing the bunching of two periods' profits into one year of assessment merely because death forced interim accounts. The deceased's own share to the date of death is income of the deceased; post-death the estate and its beneficiaries are taxed under Section 11 (see Taxation of Trusts and Deceased Estates).
• Commissioner-approved accounting dates. Where the Commissioner has, under Section 37(13), accepted a non-December accounting date for the firm, each partner's share is deemed to accrue on that date and falls in the year of assessment in which that date falls.

C.4 Partner-level items: the appropriation/expense boundary

The single most practical skill in partnership taxation is classifying flows between firm and partner. The test: is the firm paying the partner in his capacity as partner (appropriation), or dealing with him in a different capacity at arm's length (expense)?

Flow	Character	Treatment in firm's computation	Treatment in partner's hands
Partner's "salary" / monthly draw	Appropriation of profit	Not deductible — add back	Part of Section 10(2) share; trade income at 25% flat; no PAYE (13th Sch para 1(e))
Interest on partner's capital account	Appropriation	Not deductible — add back	Part of share (trade income)
Drawings of cash/goods	Appropriation (goods: trading stock taken for own use enters gross income at Second Schedule value — Section 8(1)(h))	Not expenditure; stock adjustment applies	Drawn against share already taxed
Genuine arm's-length rent for a building the partner owns personally (outside partnership assets)	Expense (landlord capacity)	Deductible under Section 15(2)(a) if market-rate and for trade	Rental gross income of the partner (investment income, 25% flat)
Interest on a true loan by the partner to the firm (distinct from capital contribution)	Expense (lender capacity)	Deductible if Section 15(2)(a) satisfied	Interest gross income of the partner; RTI considerations if paid via financial institution
Salary to partner's spouse who genuinely works in the business	Expense	Deductible to the extent reasonable for services actually rendered (excess = appropriation / Section 98A risk)	Spouse's employment income — PAYE applies
Pension contributions for a partner	Personal deduction of the partner	Not a firm expense (appropriation if paid by firm)	Deductible to the partner per Sixth Sch (partnership = "employer"; annual emoluments = partnership taxable income)
Medical aid/insurance premiums for a partner	Appropriation	Add back	Partner may claim the 50% medical credit personally (FA Section 12)
Annuity to a retired (ill-health/infirmity/old-age) former partner	Expense by express provision	Deductible under Section 15(2)(q)(ii) up to the per-partner cap	Gross income of the recipient (annuity — Section 8(1)(a))

Two refinements deserve emphasis:

• Why partner salaries are not deductible. Deduction under Section 15(2)(a) requires expenditure incurred in the production of income; a division of the income among its owners is conceptually incapable of producing that income. The leading articulation is the South African decision in Sacks v Commissioner for Inland Revenue (1946, Appellate Division) — persuasive, not binding, in Zimbabwe — where the court held that a partner cannot be the employee of his own partnership, since a person cannot contract with himself; a partnership "salary" is merely a preferential method of dividing profit. Zimbabwe's statute embeds the same idea in Thirteenth Schedule paragraph 1(e).
• Dual-capacity dealings are respected if genuine. The firm and a partner can deal as landlord/tenant or lender/borrower, because the other partners are counterparties too. But the arrangement must be real and at market value: Section 2A makes the partner and the firm associates, so non-arm's-length pricing invites Section 98B adjustment (to the median of the arm's-length range) plus the documentation-graded penalty, and grossly abnormal arrangements risk full Section 98 reconstruction.

C.5 Losses, capital allowances and the partner's personal position

• Assessed losses belong to the partners. Since the firm is not a taxpayer, it cannot carry forward an assessed loss. A partnership loss for the year is allocated under Section 10(2) exactly like a profit, and each partner sets his share against his other income under the Section 15(3) assessed-loss rules studied in Corporate Income Tax in Zimbabwe (carry-forward capped at six years for non-mining losses, subject to the anti-loss-trafficking proviso). A partner with employment income should note the baskets: the loss arises in the trade basket; the Finance Act taxes employment and trade income separately, and the offsetting of a trade loss against employment income follows the ordinary aggregation rules for the individual's taxable income computation.
• Capital allowances flow through. The Fourth Schedule allowances (SIA at 25% with accelerated wear and tear, wear and tear at the scheduled rates, scrapping allowance) are computed on the partnership's qualifying assets within the Step-1 computation and thereby shared in profit-sharing ratio; elections (e.g. SIA) are made in the joint computation. On a change in the firm's composition, partnership assets change ownership in part (delectus personae — the old firm dissolves), engaging Fourth Schedule paragraph 8 (deemed cost on change of ownership at fair market price) with the potential for recoupment under Section 8(1)(j) in the old partners' hands; the paragraph 8(3)-type elections to transfer at tax value mitigate this in qualifying reconstructions (see Capital Allowances — Fourth Schedule). The staff-housing definition excludes partner-occupation flat schemes (B.12), and the homestead/private-dwelling limits apply as usual.
• Personal credits and the AIDS levy. Each individual partner claims his own credits (elderly 55+, blind, disabled — US$900 each; medical 50%) against his total tax, and pays the 3% AIDS levy on the tax after credits. Corporate partners get no personal credits (FA Section 5(3)).
• Exempt and finally-taxed flows keep their character. If the firm earns local dividends (exempt in the partners' hands via the Third Schedule paragraph 9 route as dividends from a Zimbabwean company chargeable to tax) or interest already subjected to final RTI (Third Schedule paragraph 10A), the better view — consistent with the conduit principle — is that each partner's share retains that character; the joint return discloses the flows and the partners exclude or credit them accordingly.

C.6 The compliance cycle in detail

For a firm with a 31 December accounting date and individual partners, the annual cycle runs:

1. During the year: each partner estimates his expected share (plus other trade/investment income) and pays QPDs on 25 March (10%), 25 June (25%), 25 September (30%) and 20 December (35%) — Section 72; material under-estimates attract the Section 72 penalty/interest exposure. The firm operates PAYE monthly for employees only, remitting by the 10th of the following month (Thirteenth Schedule paragraph 3).
2. After year-end: the firm prepares accounts; the partners render the joint return with the accounts and prescribed particulars (Section 37(15)); each partner files his individual return/self-assessment (Section 37A — within four months of year-end for specified taxpayers, i.e. by 30 April; ITF 12C for trade-income self-assessors, per the ZIMRA guide), returning his share plus all other income, in the correct currency split (Section 37AA and FA Section 4A: USD-earned income returned and taxed in USD, ZiG in ZiG).
3. Assessment and payment: each partner is separately assessed (Section 51(5)) or his return stands as the assessment (Section 37A(10)–(11)); balances are payable per the notice; objections run per partner (30 days — Section 62).
4. Records: the firm and the partners keep records for six years in English (Section 37B; see Returns and Record-Keeping Compliance).
5. Registration: the firm's commencement triggers registration duties under Part IIIA (Sections 25A–25E) for the business and the partners as taxpayers; each partner needs his own taxpayer registration since he is the assessable person.

C.7 Partnership changes: admission, retirement, dissolution

Because each change of composition dissolves the old firm at common law, tax practice treats the year of change as two computation periods (old firm to the change date; new firm thereafter), unless the Commissioner accepts a single set of accounts with internal apportionment:

• Admission of a partner mid-year: profit to the admission date is shared in the old ratio among the old partners; profit thereafter in the new ratio including the newcomer. The newcomer's capital contribution is a capital receipt of the firm (not gross income); any payment by the newcomer to the old partners personally for a share of goodwill is a capital receipt of theirs (CGT analysis applies if a specified asset is involved — see the CGT lessons).
• Retirement: the retiring partner is taxed on his share to exit. Post-retirement annuities paid to him for ill-health/infirmity/old age are deductible to the continuing firm within the Section 15(2)(q)(ii) cap and are gross income (annuity, Section 8(1)(a)) in his hands. Lump-sum buy-outs of his capital and goodwill interests are capital.
• Death: deceased's share to date of death is his income; survivors' broken-period shares are deferred per the Section 37(15) proviso; the estate enters the deceased-estate regime (Section 11; executor as representative taxpayer, Sections 53–56 — Representative Taxpayers).
• Full dissolution: final accounts to dissolution date; each partner taxed on his final share; trading stock distributed in specie to partners is dealt with at Second Schedule values (own-use/disposal rules, Section 8(1)(h)); capital assets distributed engage recoupment (Section 8(1)(j)) to the extent allowances were claimed, with the excess over cost in the capital field.

C.8 Partnerships across the tax heads — a perspective check

• VAT: the VAT Act [Chapter 23:12] treats the partnership as a "person" and registrable operator; the firm (not the partners) charges output tax, claims input tax and files VAT returns, and Section 47 of the VAT Act appoints representatives. Transparency is an income-tax doctrine — do not export it to VAT (see Representative Persons and Withholding Agents).
• CGT: partners own specified assets (immovable property, marketable securities) in co-ownership; each partner's disposal of his undivided share is his own CGT event under the Capital Gains Tax Act [Chapter 23:01] (see Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal… et seq.).
• IMTT: transfers through the firm's bank accounts attract the 2% intermediated money transfer tax subject to the Thirtieth Schedule exemptions (Other Income-Based Levies (IMTT, Carbon Tax, etc.)) — and note that IMTT is a prohibited deduction in the income-tax computation (Section 16(1)(d1), with the Mlilo litigation caveat noted in Prohibited Deductions under section 16).
• Withholding taxes: the deemed-residence rules of B.10 govern the firm's cross-border flows; Section 80'Section 30% contract withholding bites a non-compliant firm's receipts from the State and registered traders.

All computations below are for the year of assessment 2025, in USD, using the confirmed rates: individuals' trade/investment income 25% flat (FA Section 14(2)(b)); employment income per the 2025 USD annual table (0% ≤ US$1,200; 20%, 25%, 30%, 35%; 40% > US$36,000 with a US$4,020 subtraction); AIDS levy 3% of tax; company rate 25%.

D.1 Individuals: a two-partner law firm (professional partnership)

Scenario. Moyo & Chikore Legal Practitioners is a Harare law firm. Partners: Tariro Moyo and Brian Chikore, profit-sharing ratio 60:40 as at 31 December 2025. The firm's accounts show:

Item	USD
Fee income (all Zimbabwe-source)	300,000
Less: staff salaries (employees — PAYE operated)	(84,000)
Less: office rent, library, insurance, sundry deductibles	(60,000)
Less: "partners' salaries" (Moyo 30,000; Chikore 24,000)	(54,000)
Less: interest on partners' capital (Moyo 4,000; Chikore 2,000)	(6,000)
Less: depreciation of office equipment	(10,000)
Accounting profit	86,000

Tax adjustments: capital allowances on the equipment (Fourth Schedule) amount to US$12,000; all other expenses qualify under Section 15(2)(a).

Step 1 — Firm's taxable income (joint computation):

	USD
Accounting profit	86,000
Add back: partners' salaries (appropriation)	54,000
Add back: interest on partners' capital (appropriation)	6,000
Add back: depreciation (not deductible — 4th Sch para 12)	10,000
Less: capital allowances	(12,000)
Partnership taxable income	144,000

Step 2/3 — Allocation (Section 10(2)): restore appropriations, split balance 60:40.

	Moyo (USD)	Chikore (USD)	Total
Salary	30,000	24,000	54,000
Interest on capital	4,000	2,000	6,000
Balance 60:40 (of 84,000)	50,400	33,600	84,000
Share of taxable income	84,400	59,600	144,000

Step 4 — Each partner's tax (no other income; trade income, flat rate):

Moyo: 84,400 × 25% = 21,100.00; AIDS levy 3% = 633.00; total US$21,733.00. Chikore: 59,600 × 25% = 14,900.00; AIDS levy 3% = 447.00; total US$15,347.00.

Observe: no PAYE was ever due on the US$54,000 of partner "salaries" (Thirteenth Schedule para 1(e)); had the firm wrongly run them through payroll, the partners would still have had to return the amounts as trade income, with the PAYE reclaimed/credited — an administrative tangle. Observe also the rate effect: as trade income the whole share bears 25%; an employee earning US$84,400 of remuneration would instead pay per the scale (84,400 × 40% − 4,020 = US$29,740 before levy) — for high earners the flat 25% on trade income is substantially lighter than the top of the employment scale; for a low-income partner the comparison cuts the other way, because the flat rate has no 0% threshold (a partner with a US$3,000 share pays 25% = US$750 + levy, while an employee on US$3,000 of remuneration would pay only 20% on the excess over US$1,200 = US$360 + levy).

Step 5 — Compliance: joint return + accounts (Section 37(15)); each partner self-assesses by 30 April 2026 (Section 37A, ITF 12C if specified); each pays 2025 QPDs on his own estimate: Moyo's QPDs on US$21,733 ≈ 2,173 (25 Mar), 5,433 (25 Jun), 6,520 (25 Sep), 7,607 (20 Dec). As legal practitioners, both are "self-employed professionals" — from 1 January 2025 the presumptive option is abolished and Section 37A compliance is mandatory (FA Section 22C(3)).

D.2 Partner with mixed income: employment plus partnership share

Scenario. Dr Rudo Ncube earns a hospital salary of US$30,000 (employment) and a US$20,000 share from a three-doctor surgery partnership.

• Employment basket (progressive scale, annual USD table): 30,000 × 35% − 2,220 = US$8,280.00; this is collected via PAYE/FDS by the hospital.
• Trade basket (partnership share): 20,000 × 25% = US$5,000.00, payable by Dr Ncube via QPDs.
• AIDS levy 3% on the combined tax: (8,280 + 5,000) × 3% = 398.40.
• Total liability: US$13,678.40, of which PAYE covers the employment slice; the Section 37A return reconciles both baskets (she cannot rely on the Section 37A(8) no-return concession, which is confined to persons whose sole income is FDS-handled employment income).

The two-basket structure (FA Section 14(1) definitions) is the key teaching point: the same individual simultaneously faces the progressive scale and the flat rate, and the partnership share never enters the PAYE system.

D.3 SME trading partnership: capital allowances and the convention deduction

Scenario. TashAgro Supplies, a Bulawayo agricultural-inputs dealership, is a partnership between siblings Kuda (50%), Nyasha (30%) and Tafara (20%). 2025 results: trading taxable income US$96,000 before capital allowances and before a convention claim. During 2025 the firm bought new delivery equipment for US$40,000 (SIA elected, 25%) and paid US$5,000 for Kuda and Nyasha to attend one international agro-dealers' convention connected to the trade (US$2,500 each).

• SIA: 40,000 × 25% = US$10,000 (year of first use; wear and tear on the balance begins the following year — 4th Sch paras 2, 3(2)).
• Convention (Section 15(2)(w) proviso (ii)): one convention per partner; each partner's slice capped at the lesser of expenditure (2,500) or US$3,600 → US$5,000 fully deductible, allocated to all partners in PSR (not only to the attendees): Kuda 2,500; Nyasha 1,500; Tafara 1,000.
• Partnership taxable income: 96,000 − 10,000 − 5,000 = US$81,000, split 50/30/20 → Kuda 40,500; Nyasha 24,300; Tafara 16,200.
• Tax (each at 25% + 3% levy): Kuda 10,125 + 303.75 = 10,428.75; Nyasha 6,075 + 182.25 = 6,257.25; Tafara 4,050 + 121.50 = 4,171.50.

Had TashAgro instead traded as a private company, the company itself would have paid 81,000 × 25% = 20,250 (+ levy), and extraction of the balance as dividends would have attracted resident shareholders' tax (15% unlisted — Withholding Taxes — Residents and Non-Residents): the partnership avoids the second layer entirely because there is no distribution event — the profit is the partners' when it arises. This single-layer character is the partnership's principal structural attraction (weighed against unlimited joint liability).

D.4 Death of a partner: the Section 37(15) proviso worked through

Scenario. The M&P trading partnership (accounting date 31 December; partners Maria 50%, Peter 50%) loses Peter on 30 June 2025. Accounts to 30 June 2025 show profit of US$60,000; Maria continues alone (as a sole trader) thereafter, earning US$50,000 to 31 December 2025.

• Peter (deceased): his 50% share to death — US$30,000 — is income of Peter to the date of death, returned by the executor in the pre-death assessment (taxed at 25% flat + levy). Post-death dealings are the estate's affair (Section 11).
• Maria: her 50% share of the broken-period profit — US$30,000 — is, by the proviso, not required to be returned merely because death forced interim accounts; it is included in the return for the year of assessment in which the first anniversary of the last pre-death accounting date (31 December 2024 → anniversary 31 December 2025) falls — i.e. the 2025 year of assessment, alongside her US$50,000 sole-trade result. (Here the anniversary falls in the same year, so no deferral materialises; had Peter died after a February 2025 accounting date firm's interim accounts, the survivors' shares would have been deferred to the year containing the February 2026 anniversary — the proviso matters most for non-December accounting dates.)
• Maria'Section 2025 position: 30,000 + 50,000 = 80,000 × 25% = 20,000 + 600 levy = US$20,600.

D.5 Recovery from the firm: Section 77(5) in action

Scenario. Partner Joseph owes ZIMRA US$18,000 for 2025, of which his taxable income was US$60,000 partnership share + US$12,000 personal rental income (total US$72,000). He has dissipated his personal assets; execution against them realises nothing material. His interest in the firm's assets is worth US$11,000.

• Partnership-referable tax (Section 77(5)(b)): 18,000 × 60,000/72,000 = US$15,000.
• The Commissioner notifies the firm under Section 71(1); the firm is deemed chargeable with the US$15,000, but recovery is capped at Joseph's interest: US$11,000.
• The firm pays US$11,000 (recouping it against Joseph's capital account); Joseph is released to that extent, remaining personally liable for the US$7,000 balance (US$4,000 unreached partnership-referable tax + US$3,000 rental-referable tax, which Section 77(5) never touches).
• The co-partners' own shares of firm assets are never exposed — the cap protects them.

D.6 Large structures and multinationals

• International professional networks. A Zimbabwean audit or law firm affiliated to a global network typically pays network/management fees abroad. The firm is a "payer" under the Seventeenth Schedule; fees for technical, managerial, administrative or consultative services paid to a non-resident attract 15% non-residents' tax on fees, with the Section 16(1)(r) cap on deductible management fees paid to associates and the Section 26(2)/28(2) deemed-dividend overlay where caps are exceeded (see Withholding Taxes — Residents and Non-Residents, Prohibited Deductions under section 16, Transfer Pricing and Anti-Avoidance). The firm is deemed ordinarily resident (one resident member suffices), so the deemed-source rule attaches to its payments.
• Non-resident partners. A foreign individual or company admitted to a Zimbabwean firm derives a share whose source follows the firm's Zimbabwean activities — fully taxable here (source, not residence, is the gateway: Tax Residence and Source of Income). Collection risk is managed through the joint-return data, Section 77(5), and where relevant the representative-taxpayer machinery (agent of a non-resident — Sections 53 et seq.). A corporate non-resident partner with a fixed place of business through the firm will also meet the Section 19B permanent establishment definition, anchoring Section 19A attribution.
• Dividends to a foreign firm. A Zimbabwean company paying dividends to a partnership not ordinarily resident here withholds NRST (Ninth Schedule) at 10%/5%/15% per the Finance Act Section 15 — the partnership's transparency does not defeat the withholding, which operates on the recipient as named.
• Mining and State joint ventures. Partnerships, syndicates and joint ventures are "mining entities" capable of holding title (Section 98D), and a State JV may be a prescribed "public entity" (FA Section 23) — specialised regimes (Fifth Schedule capital redemption, special mining lease) then overlay the partnership analysis (Taxation of Mining Operations in Zimbabwe).

Zimbabwean reported authority dealing squarely with partnership taxation is sparse — the area is governed primarily by the express statutory architecture set out in section B — but the following decisions and persuasive authorities shape interpretation:

• Sacks v Commissioner for Inland Revenue 1946 AD 31 (South Africa — persuasive, non-binding). The foundational Southern African statement of the conduit doctrine's corollary: a partner cannot be the employee of his own firm, and a partnership "salary" is in truth an agreed preferential share of profit, not deductible expenditure. Zimbabwe's Thirteenth Schedule paragraph 1(e) and the add-back practice in C.4 embody the same principle.
• CIR v Lever Brothers & Unilever Ltd 1946 AD 441 (South Africa — persuasive). The originating-cause test of source (established in Tax Residence and Source of Income) governs where a partnership's income — and hence each partner's share — is sourced: the location of the firm's work, not of the partner, decides.
• Mota Engenharia Construction SA v ZIMRA 22-SC-115 (Zimbabwe, Supreme Court). Annotated against the Section 2 definition of "person" in the source Act: "person" includes a non-resident entity. Relevant where foreign companies participate in Zimbabwean partnerships and joint ventures — each venturer is itself a chargeable person on its share.
• Zacks E 93-HB-104 and D v COT 99-ICT-1669 (Zimbabwe — Section 98 line of cases, per the annotations discussed in Transfer Pricing and Anti-Avoidance). The anti-avoidance courts will not allow taxpayers to manufacture liabilities or divert income through arrangements with associates lacking commercial substance — the doctrinal backdrop against which artificial family partnerships and late ratio changes are tested under Sections 98 and 98A.
• Boundary cases on employee vs partner status are resolved on common-law principles (contribution, joint benefit, profit object, intention, mutual agency); where Zimbabwean authority is lacking, South African and English decisions on the partnership essentials are persuasive only. No Zimbabwean case in the 27 May 2025 source materials decides the "salaried partner" question directly; practitioners should reason from the statutory definitions and the common-law essentials, documenting substance carefully.

1. Deducting partners' salaries and interest on capital in the firm's computation. The classic error. These are appropriations; Section 15(2)(a) cannot apply, and Thirteenth Schedule paragraph 1(e) confirms they are not remuneration. Correct approach: add back in the joint computation; allocate to the partners under Section 10(2).
2. Operating PAYE on partners — or failing to operate it on staff. Both directions go wrong: payroll-running partner draws creates spurious PAYE (and understates QPDs due); conversely, treating a salaried "partner" who is in substance an employee as outside PAYE exposes the firm to the Thirteenth Schedule paragraph 10 personal liability (tax plus a 100% loading) on amounts it should have withheld.
3. Taxing the partner's share on the employment scale (or assuming the US$1,200 threshold applies). A partner's share is trade or investment income at the flat 25%; there is no 0% band, and the 40% top rate never applies to it. Mixed-income partners must run two baskets (D.2).
4. Forgetting the partner's own QPDs. Because no PAYE is withheld on the share, the partner who fails to pay provisional tax on 25 March / 25 June / 25 September / 20 December accumulates penalty and interest exposure under Section 72 — a very common first-year-partner failure.
5. Filing the joint return but no individual returns (or vice versa). Section 37(15) and Section 51(5)/37A demand both layers. Every partner is separately liable for the joint return's rendering; each must also return his own share.
6. Ignoring the accounting-date ratio rule. Splitting the year's profit using a blend of old and new ratios after a mid-year change misapplies Section 10(2), which fixes the split by the agreement as at the accounting date. Conversely, engineering a late ratio change purely to divert profit to a loss-rich or low-taxed associate invites Sections 98/98A reconstruction with penalties up to 100%.
7. Treating the firm as transparent for VAT, or as opaque for income tax. The firm registers and accounts for VAT as itself; it never pays income tax. Conflating the heads produces wrong registrations, wrong invoices and wrong returns.
8. Missing the Section 15(2)(q) cap and conditions on retired-partner annuities. The deduction requires retirement on grounds of ill-health, infirmity or old age, is capped per former partner, and is reduced by fund pensions attributable to the former partnership's contributions. Uncapped "consultancy" payments to a retired partner who renders no services are appropriations/avoidance targets.
9. Claiming the convention deduction without the per-partner discipline. Section 15(2)(w) allows one convention or trade mission per partner per year, capped at US$3,600 each, allocated in PSR — not an unlimited firm-level marketing budget.
10. Overlooking recoupments when the firm's composition changes. Admissions, retirements and dissolutions shift ownership of allowance-bearing assets; without the Fourth Schedule elections, deemed disposals at market value can trigger Section 8(1)(j) recoupments the partners did not anticipate.
11. Family partnerships without substance. Allocating a large share to a spouse or child who contributes neither capital nor effort is the textbook Section 98A income-splitting case: the Commissioner adjusts both parties' taxable incomes, weighing the value actually given by the associate.
12. Documentation failures. No written deed means the profit-sharing ratio, capital entitlements and dissolution terms must be proved from conduct — a weak position in a Section 63 onus contest where the Commissioner's allocation stands unless shown wrong. Reduce the agreement to writing; keep the six-year records (Section 37B).

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• A partnership is not a "person" (Section 2(1) exclusion), hence never a taxpayer: Zimbabwe taxes the partners, via the conduit principle.
• Section 10(2) is the engine: partnership income is deemed the partners' income on the accounting date, in the profit-sharing proportions as at that date — attribution, proportion and timing in one sentence.
• One joint return, separate assessments: Section 37(15) (joint return + accounts; every partner separately liable for rendering it) and Section 51(5) (separate assessments); liability to tax is individual only.
• Partners are outside PAYE: Thirteenth Schedule para 1(e) excludes amounts paid out of partnership moneys to a member; partner salaries, interest on capital and drawings are appropriations — add back in the joint computation, never deduct.
• The rate is the flat trade-and-investment rate — 25% + 3% AIDS levy for YA2025 (FA Section 14(2)(b)) — not the progressive employment scale; mixed-income partners run two baskets, and the partner settles the share's tax through Section 72 QPDs.
• Transparency has statutory limits: Section 77(5) lets ZIMRA recover a partner's partnership-referable tax from the firm (after exhausting his other assets, capped at his interest); withholding Schedules deem a firm ordinarily resident if one member is; Section 2A makes partner and firm associates, importing Sections 98/98A/98B discipline.
• Special partner provisions: retired-partner annuities deductible within the Section 15(2)(q)(ii) cap; conventions/trade missions one per partner, US$3,600 cap, shared in PSR (Section 15(2)(w)); partner pension contributions deductible via the Sixth Schedule deeming (partnership = employer; annual emoluments = partnership taxable income) — allowed only for periods from 1 April 1995.
• Composition changes have tax texture: the death proviso to Section 37(15) defers survivors' broken-period shares; admissions/retirements/dissolutions can trigger Second and Fourth Schedule adjustments and recoupments.
• Keep the heads separate: the firm is a person for VAT and registrable in its own name; CGT bites the partners on their undivided shares; professional partners lost the presumptive-tax option from 1 January 2025 (FA 2024) and must self-assess under Section 37A.
• Policy insight: transparency delivers single-layer taxation (no dividend withholding on extraction) at the price of unlimited liability and per-partner compliance; the legislature's flat 25% on trade income deliberately aligns the partner, the sole trader and the company at the same headline rate, leaving progressivity to employment income.

Summary table: partnership vs company vs sole trader (YA2025)

Feature	Partnership	Private company	Sole trader
Taxable person?	No — partners taxed (Section 2(1), Section 10(2))	Yes — separate person	The individual
Rate on profits	25% flat + 3% AIDS levy, per partner (FA Section 14(2)(b))	25% + AIDS levy (FA Section 14(2)(c))	25% flat + AIDS levy (trade income)
Second layer on extraction	None — profit is partners' when it arises	Dividend WHT: 15% unlisted / 10% listed / 5% VFEX	None
Owner's pay deductible?	No — appropriation (add back)	Director's salary deductible; PAYE applies	No — own drawings
PAYE on owner	No (13th Sch para 1(e))	Yes, on director remuneration	No
Returns	Joint return (Section 37(15)) plus each partner's return; separate assessments (Section 51(5))	ITF 12C company return	Individual return
Loss carry-forward	At partner level (Section 15(3), 6-year cap)	At company level	At individual level
Provisional tax	Each partner's QPDs (Section 72)	Company QPDs	Individual QPDs
Liability for debts	Joint and personal (unlimited)	Limited	Unlimited
Continuity	Dissolved by change of membership/death	Perpetual succession	Ends with owner
VAT status	Registrable person in its own name	Registrable person	Registrable person

Determination diagram: how an amount flowing from a partnership is taxed

flowchart TD
 A[Amount arises in or from the partnership] --> B{Paid to a partner in capacity as partner?}
 B -->|Yes: salary, interest on capital, drawings| C[Appropriation of profit]
 C --> D[Add back in joint computation - not deductible, no PAYE]
 B -->|No: arm's-length dual capacity e.g. true lease or loan| E[Expense of firm if Section 15-2-a met]
 E --> F[Gross income of partner in that other capacity]
 D --> G[Compute partnership taxable income as single trader]
 G --> H[Section 10-2: allocate to partners on accounting date in PSR as at that date]
 H --> I{Partner type?}
 I -->|Individual| J[Trade or investment income: flat 25% plus 3% AIDS levy - FA Section 14-2-b]
 I -->|Company| K[Company taxable income: 25% - FA Section 14-2-c]
 J --> L[Partner pays own QPDs Section 72; joint return Section 37-15; separate assessment Section 51-5]
 K --> L

Compliance-cycle diagram

flowchart TD
 A[1 Jan: year of assessment opens] --> B[Each partner estimates share and other income]
 B --> C[QPDs: 10% by 25 Mar, 25% by 25 Jun, 30% by 25 Sep, 35% by 20 Dec]
 A --> D[Firm runs PAYE monthly for employees only - remit by 10th]
 C --> E[31 Dec or approved date: accounting date - Section 10-2 accrual to partners]
 D --> E
 E --> F[Joint return plus accounts - Section 37-15]
 F --> G[Each partner files self-assessment within 4 months - Section 37A]
 G --> H[Separate assessments or return-as-assessment - Section 51-5, Section 37A-10]
 H --> I[Objection rights per partner - 30 days]
 H --> J[Default? Section 77-5 recovery from firm, capped at partner's interest]

Statutes & sections

• Income Tax Act [Chapter 23:06] — Section 2(1) (definitions of "person" (excluding partnership), "taxpayer", "agent" (including partnership)); Section 2A(2)(b), (c), (f) (partner and partnership as associates; 50% control of rights to income or capital); Section 2B (control through interposed partnerships); Section 6 (charge on persons); Section 8(1) (gross income; para (f) "person associated" includes partnership of which employer is a member; paras (h), (j) stock and recoupment rules engaged on dissolution); Section 10(2) (partnership income deemed partners' income on accounting date in agreed proportions); Section 15(2)(h) and proviso (pension contributions; partner contributions disallowed for periods before 1 April 1995); Section 15(2)(q)(ii)–(iii) (annuities to former partners and dependants; caps; "former partner"/"former partnership" definitions); Section 15(2)(w) proviso (ii) (one convention/trade mission per partner; US$3,600 cap; PSR allocation); Section 16 (prohibited deductions, applied in the joint computation); Section 37(15) and proviso (joint return; accounts; individual liability for rendering; death-of-partner deferral); Section 37A (self-assessment); Section 37AA (separate currency returns); Section 51(5) (separate assessments upon partners); Section 72 (provisional tax/QPDs); Section 77(5) (recovery of partner's partnership-referable tax from the firm; ratio; cap at partner's interest); Section 80 (30% contract withholding absent ITF 263); Section 98, 98A, 98B (anti-avoidance applied to partner-firm dealings); Section 98D ("mining entity" includes partnerships/syndicates/joint ventures).
• Income Tax Act Schedules — Fourth Schedule (capital allowances in the joint computation; "staff housing" exclusion of partner-occupation schemes; para 8 change-of-ownership rules); Sixth Schedule ("employer" means the partnership for a partner-member; "annual emoluments" = taxable income from the partnership); Ninth Schedule (NRST on dividends to a partnership not ordinarily resident); Thirteenth Schedule (para 1 "remuneration" exclusion (e) for amounts paid out of partnership moneys to a member; paras 3, 10, 11 PAYE machinery for the firm's employees); Seventeenth and Nineteenth Schedules (partnership as payer; deemed ordinary residence where at least one member ordinarily resident); Twenty-First Schedule (partnership as payee for residents' tax on interest); Twenty-Sixth Schedule ("self-employed professional" includes an individual practising as a member of a partnership).
• Finance Act [Chapter 23:04] — Section 5 (credits; denial to companies/trusts); Section 14(1) (definitions of "taxable income from employment" and "taxable income from trade or investment"); Section 14(2)(a) (progressive scale on employment income; YA2025 bands); Section 14(2)(b) (individuals' trade or investment income — flat 25% per the rates schedule); Section 14(2)(c) (companies and trusts — 25%); Section 15 (NRST rates 10%/5%/15%); Section 17 (RST rates 10%/15%); Section 19 (fees 15%); Section 21 (royalties 15%); Section 22 (interest 5%/15%); Section 22C(3) (self-employed professionals to comply with Section 37A; presumptive option ended 1 January 2025); Section 23 ("public entity" includes prescribed State partnerships/joint ventures); Schedule to Chapter I (credits US$900; rate tables).
• Value Added Tax Act [Chapter 23:12] — partnership as registrable person/operator (contrast with income-tax transparency); Section 47 representatives (see Representative Persons and Withholding Agents).

Case law

• Sacks v Commissioner for Inland Revenue 1946 AD 31 (South Africa; persuasive, non-binding) — partner cannot be employee of own firm; partnership "salary" is a share of profit, not deductible expenditure.
• CIR v Lever Brothers & Unilever Ltd 1946 AD 441 (South Africa; persuasive) — source = originating cause; governs the source of partnership income and hence of each partner's share.
• Mota Engenharia Construction SA v ZIMRA 22-SC-115 (Zimbabwe SC) — "person" includes non-resident entities (annotation to Section 2 in the source Act); relevant to foreign corporate partners.
• Zacks E 93-HB-104; D v COT 99-ICT-1669 (Zimbabwe; annotated to the anti-avoidance provisions) — courts will not countenance manufactured liabilities or substance-free diversions of income between associates.

ZIMRA guidance

• ZIMRA, Comprehensive Guide to the ITF 12C Income Tax Self-Assessment Return — confirms that individuals and partnerships earning trade or investment income file the ITF 12C where specified by the Commissioner-General; box-level guidance on capital allowances and computations.
• ZIMRA, PAYE Foreign Currency (USD) Tax Tables, January–December 2025 — YA2025 employment bands (annual: 0% to US$1,200; 40% above US$36,000) and the statement "Aids Levy is 3% of the Individuals' Tax payable".

Cross-references in this course

Persons Liable to Income Tax in Zimbabwe (the taxable-person map and the partnership gap); Introduction to Taxation in Zimbabwe (charging architecture, funnel, year of assessment); Gross Income Definition and Case Law, Allowable Deductions and General Formula, Specific Allowable Deductions (section 15(2)), Prohibited Deductions under section 16, Capital Allowances — Fourth Schedule (the machinery applied inside the joint computation); Taxation of Individuals in Zimbabwe (individuals' aggregation, credits, dual currency); Taxation of Employment Income and PAYE (PAYE machinery for the firm's true employees); Withholding Taxes — Residents and Non-Residents (the Schedules' partnership deeming rules); Transfer Pricing and Anti-Avoidance (Sections 98/98A/98B as applied to partner-firm dealings); Taxation of Trusts and Deceased Estates (death of a partner; estates); Taxation of Farmers in Zimbabwe and Taxation of Mining Operations in Zimbabwe (sector overlays where the partnership farms or mines); Representative Persons and Withholding Agents (the VAT contrast).